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OPEC+ oil production cuts likely to stay for now

Speaking at a press conference, Ihsan Abdul-Jabbar, Iraq’s oil minister, hinted that when the OPEC+ group meets next month, it will probably agree to maintain the current levels of production throughout April this year. He added that Saudi Arabia will also extend its voluntary additional cut of a million barrels per day (bpd).

Iraq itself, however, has not yet met its quota. Jabbar reaffirmed the country’s commitment to the deal, but he indicated that the oil-rich Iraqi Kurdistan part of the country, which is semi-autonomous, needed to also contribute to make this a reality.

Oil revenue funds about 90% of government spending in Iraq, and low oil prices have made it difficult for the country to implement the cuts. To balance the country’s budget, Jabbar recently pointed to a need for oil prices to rise to about $80, but admitted that this is unlikely this year:

“Iraq will export in 2021 about one billion and 100 million barrels of crude oil according to market data. The budget needs 140 trillion dinars ($96 billion). The price of $80 a barrel is the right price to make Iraq can pay the budget dues.”

While Iraq’s oil industry was nationalised under Saddam Hussein, it has since opened up to international operators. BP, the owner of the Castrol lubricant brand, was the first such company to return to Iraq in 2009, and it is now working in partnership with PetroChina and the Basra Oil Company to develop the super-giant Rumaila oil field.

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